August 24 2018

You manage risk on behalf of your patients, for example, you may sensitively speak to a patient about their weight by asking if it’s okay to talk about weight management, even if you know weight is an issue the patient came to discuss.

You also manage your own practice risk as per the requirements of your insurance company by running tests on your patients to confirm or disprove a suspicious set of symptoms.

The risk you manage as a medical professional is sharp — it comes into focus every day because it’s often a matter of life and death for your patients.

Running a business, on the other hand, creates different type of risk and reward. While you have a lot of experience identifying patient and doctor risks, business risks may be more difficult to detect. These risks can be both internal and external and they can also directly or indirectly affect the practice’s ability to operate. Business perils can be hazard-based (for example, chemical spills), uncertainty-based (natural disasters) or associated with opportunities (the risks involved with taking up a new business opportunity versus different risks in ignoring it).

Have you asked yourself what are the risks that could have an impact on your business objectives?

1.The Potential Risks to Your Business:

The types of risks that any business faces will be specific to your practice and personal goals but, overall, managing business risk is like managing patient risk. To effectively manage practice risk, think about internal and external scenarios that may directly affect your business — and then prepare for them.

Consider using this list below as a starting point to think more broadly about the risks that could impact your practice. Click here to download your own PDF version.

Also think about other important areas of risk you may need to consider that are not listed here.

2.Indirect Risks to Your Practice – don’t ignore what might seem like a very unlikely scenario:

Overlooking changes and issues that don’t directly affect your practice is a common error, and one which can leave you unprepared for change. For example, while your practice might not be directly affected by a natural disaster, you may still suffer if it affects your suppliers, customers or is in your general location.

As an example of this, one of our medical doctor clients recently had an unexpected superstorm hit their town in rural WA. The storm left more than 16,000 homes without power, as well as the local hospital. While the hospital had a generator, our clients didn’t — and they had vaccines that required refrigeration. So they went to the town’s only open hardware store to purchase one. Panic broke out when people from other local businesses began scrambling to obtain the last few generators. Our client managed to procure one of the last and the vaccines were saved.

If such a widespread power outage had been part of their risk-management plan, they may have already had a generation and may have avoided this stress.

Unexpected storms can be a timely reminder that we cannot control everything that affects a practice and, therefore, spending the time identifying, assessing, maybe even calculating the probability of a certain risk is worthwhile. You can then prioritise which risks your practice should be more prepared for.

3.Managing Risk In Your Business – it’s all about using innovation:

Despite the immoral, destructive and violent culture of the illicit drug trade, my research found the drug kingpins are, first and foremost, entrepreneurs and risk managers. These “pioneers” of the underworld live in an unpredictable and inherently risky world, and face a wealth of diverse “business challenges” never encountered by our mainstream business leaders.

The most successful kingpins are visionary leaders who survive by implementing effective business strategies and policies. By suspending our judgement of the drug dealer and focusing on the kingpin, we open our minds to their skills, flaws, triumphs and downfalls, all of which are magnified by the volatile environment that shapes their enterprises. This provides us with innovative approaches to managing risk during times of rapid change.

In attempting to manage risk, these leaders of the underworld had to turn to innovation, specialisation, and networking for the success of their “business”. And, of course, most of the time, their strategies paid off: the reduction of risk contributed to significant profit. While the illicit nature of their enterprises can not be admired, they were undoubtedly successful — and the resulting insights from their successes can be applied by anyone to their own legal business.

This is an edited extract from the book Growing A Medical Practice: From frustration to a high performance business.

July 04 2018

In some cases, once a Shareholders’ Agreement is prepared and signed, it is a document that sits at the back of the filing cabinet, rarely seeing the light of day. It is usually only when a question is raised that someone digs around and finds the Shareholders’ Agreement to get the answer.

A Shareholders’ Agreement can also be thought of as an insurance policy, because if something unexpected happens there is a process to follow and agreement in writing to rely on. Without the ability to rely on a signed Agreement, things can become very uncertain, very quickly. It doesn’t always have to be the result of a breakdown in the working relationship either, it can be caused by ill health, a change in an individual’s circumstances or in the worst case scenario, death.

CASE STUDY: No Shareholder Agreement

We recently had a client who operates in the health sector approach us about a matter relating to a breakdown of their relationship with a fellow shareholder. Our client and the fellow shareholder had been in business together for some time – from the start-up phase to the business becoming quite successful, through that time they never considered formally agreeing the terms of their arrangement because they thought that the Company Constitution that they had did this. As such no Shareholder Agreement was in place.

Unfortunately, for our client their fellow shareholder had to leave the business urgently due to health reasons. As a result of them leaving the business our client realised that there were significant issues that had occurred in the business including the other shareholder not properly keeping records of patient appointments.

The Company’s Constitution does and did not deal with issues relating to:

How to value the business for its sale;

What to do in case of improper / illegal actions by one of the shareholders; or

Restraints for an outgoing shareholder.

What happened next?

Because there was no Shareholders’ Agreement in place, our client was placed in a precarious position. They did not feel like they had the business that they thought they had been building, and there had been a significant move away from the values both of them had subscribed to in working towards helping people. Also, without any restraint of trade cause – our client’s co-shareholder is free to enter into a new business, right next door potentially, should they wish to.

Due to lack of a signed Agreement, our client is now left with no guiding document and feels as though they are the victim of the co-shareholder’s actions.

Our client will now incur significant expense in trying to fix the issues, as well as working out the best way to have the co-shareholder removed as a shareholder of the company.

Planning could have helped to avoid or at least mitigated these risks and costs, had a well drafted Shareholder’s Agreement been in place.

Conclusion:

I cannot impress upon you how important putting things into writing is. It is a huge risk to go in thinking “I feel good about this arrangement now and I can’t imagine that ever changing.” I personally do not enjoy seeing people in these types of situations, I would much rather see my clients be fully prepared, than knowing that they are lying awake at night worrying about how a situation might turn out.

For more information on Shareholders Agreements or to obtain your free checklist on what to include in a Shareholders’ Agreement – email me or contact us mentioning this blog.

July 03 2018

If you’ve been following the Dreamworld inquest like I have you may have been somewhat alarmed at some of the evidence that has come to light.

Evidence presented at the Coronial Inquiry paints a picture of large scale systemic issues into the operations and management of, what was, Australia’s favourite theme park.

Cost-cutting and budget maintenance is a balancing act for every organisation, but the evidence presented at the Inquest suggests a long-term lack of governance, care and focus on ensuring staff and guest safety.

Under the Corporations Act and the Workplace Health and Safety legislation, failure to exercise due care and diligence may result in hefty fines or even imprisonment, for the directors and officers of the company, that personally owe a duty of care to its stakeholders.

The most notable is Workplace Health and Safety (WHS) legislation. An officer found to have committed a tier one offence, that is, has recklessly engaged in conduct that exposes someone to injury or death is personally liable to a maximum penalty of $600,000 or five years imprisonment. A tier two offence involving a failure to exercise due care and diligence may attract a fine of up to $300,000.

Australian’s almost have apathy for large corporations who are greedy and focus on profits, take the recent Banking Royal Commission, people hear the news, roll their eyes and think “Typical of the banks to be that way”. However, when the cost cutting affects something that people can relate to personally, a theme park, which is meant to be fun, happy and joyful – creating future memories, that same apathy doesn’t seem to apply. Instead there is anger and sadness that a place built for children’s entertainment could have such a lack of regard for the safety of its patrons.

Dreamworld has lost its innocence, and the feeling that it used to evoke, wholesome, family entertainment where the cares of the world don’t exist (…even just for a moment).

Can Dreamworld ever recover when its culture does not support:

Staff training, education, and accreditation;

Ride maintenance protocols and processes;

Written procedures;

Compliance with Work Safety Audits

On the first day of the Queensland school holidays this week, the Park was reported as being empty. There were no lines at any of the major attractions and four of the major thrill nine rides were “closed for maintenance.”

How does a business that is being hammered with negative press, that in large part requires the goodwill of local residents, and has had consistent low visitor numbers in the 18 months since the accident, possibly find the resources to assure guests that everything in the park is now in tip top shape?

How do they get customers trust back?

For many Gold Coast locals and Australian’s alike – it’s extremely sad what has come to light as part of the inquiry, many of us have such fond memories of going there as children or with our children. Many have been on that same ride that tragically killed the four guests, many have taken their children on that ride –not ever thinking that it could have been a death trap. It’s sad for the employees, many of them junior members of staff, who have had to front the inquiry, testify and face media scrutiny.

There are six ways to build back trust with customers:

Communicate early and often

Make every opportunity count

Reward loyal customers

Convince customers to return

Personalise – put a name and face to your brand

Harness power of local media

It would appear Dreamworld has monumentally failed on all counts – the next session of the inquiry will see Dreamworld Senior Management and Executives called into the witness box. Watch this space.

Key Takeaways:

Leading an organisation has inherent risk, however the onus is and remains to be on its Directors and Senior Management to ensure that risk is mitigated and appropriate controls and procedures are in place. Directors and Senior Company Officers have a duty to their customers and employees, to act diligently and with due care. Events like these can sometimes be a timely reminder that over time without proper controls, workplace practices and procedures complacency can set in.

June 05 2018

Medical practices, like any business, can be structured in various ways; each with its pros and cons. It’s important to reflect on your current business structure from time to time to ensure its still meeting your needs, goals and business aspirations.

Changing and adapting your business structure is critical as your practice ebbs and flows thru its growth cycle.

Doing a regular review of your business structure is critical for long term growth

1.Sole Trader

In this set up you treat and earn income in your own name. A sole trader does not need to set up any formal business structure and its best suited to those who are running a sole GP practice, are locums or contracting.

You are responsible for business debts; there is no succession plan if something were to happen to you and there is limited flexibility for growth (if that’s what your aiming for).

2.Medical Company

A company is a separate legal entity; an incorporated company that operates as a medical practice earns income from patients and pays the business expenses. The remaining profit is distributed to the doctor/s or owners.

The advantage is that the practice is better established for long term growth, there are tax benefits, and the company itself will continue regardless of which doctors are part of the practice.

There are however on-going costs for reporting requirements.

3.Discretionary trust

More commonly known as the family trust. The trust can be set up to receive income and pay business expenses. The trust’s profits are paid by way of distributions to its beneficiaries.

The key difference between a trust and company is that a trust is not a separate legal entity.

4.Service Business

This involves setting up a separate business entity that provides administrative support. The service business “looks after” the costs of operating the practice (such as leasing and equipment) and receives a fee from the “practice” for doing so.

The advantage of using a service business is that it provides asset protection by isolating risk away from the individual.

5.Partnership

Generally, two doctors working side by side. A partnership isn’t a separate legal entity, so income, expenses, and profit is collated and split evenly between the two doctors and is reported as personal income.

This model is becoming less popular as most sophisticated structures are more advantageous.

6.Joint Venture

Individuals who enter a business relationship with a specific purpose. The main disadvantage is that the joint venture only exists for as long as it takes for the goal to be achieved and venturers are responsible for the debts.

However, depending on the goal in mind a joint venture can be a viable way to achieve a set outcome.

What Next?

Correctly structuring your business and practice is crucial for long-term success and to help guard against unwanted events. Shareholder agreements are also critical in the setting up stage and go hand in hand with having the right business structure.

As with any key business decision, it pays to seek the advice of a qualified accountant or lawyer who can guide you through the process.

If you have any legal issues you would like to discuss, get in touch with us today our team at You Legal is always ready to help.

* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

November 15 2017

It is essential Directors ensure their company does not trade in a way that causes insolvency or trade while it is insolvent. Directors are personally liable for failure to fulfill this duty. Their personal assets may be at risk if it’s proven the company traded while insolvent. Moreover, trading while insolvent may lead to criminal liability.

Knowing that a company is insolvent is trickier than it looks. There are no visible or telltale signs that the company is going down. Some companies may become insolvent due to the type of business they are operating, such as trading in commodity prices.

It’s expected that Directors keep an eye on cash flow and other financial records, invoices, payment of creditors and repayment of any long-term loans the company has entered into. Steps should be taken to address the matter before it goes out of hand. The worst thing is to bury your head in the sand in the hope that the issue will disappear on its own.

Elements of Possible Breach of Duty

Some debt incurred by the company

The company becomes insolvent or is already insolvent

There are reasonable grounds to prove that the insolvency came about because of incurring debt.

The issue at hand is to have reasonable grounds to suspect insolvency. The court of law also tries to determine if the Directors knew before taking on the debt that the company had become insolvent. If it can be proved by the court, it does not matter whether the Director did not take the necessary steps or was not aware of the insolvency.

Directors are criminally liable for failing to prevent a company from incurring debt that ends up making the company insolvent. You must evaluate every business transaction and determine if your business has the capacity to repay the contract. If not, you could be sued for the decision to incur the debt as being dishonest or misleading. The penalties upon conviction could include time in jail, or other penalties and fines as determined by the court.

WHAT DO I DO NOW?

Contact us if you would like to have more information on managing the legal risks involved with possible company insolvency. Our lawyers at You Legal will be happy to assist you in whatever way we can.

* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

August 23 2017

The shareholders place their confidence on the directors and their ability to manage the organization. Therefore, it is expected that the directors should have the right experience and skill to perform their duties. The directors are expected to be diligent and take care when making decisions on behalf of the organization.

However, the standard of care that is expected of the directors differs from one organization to the other. It also depends on the kind of decisions that the directors make on behalf of the organization.

If you are sued for breach of director duty, there are a number of defenses you can put forward to avoid liabilities:

Reliance on Expert Advice

All decisions are supposed to be made on tangible information. If the directors do not have the information to make decisions, they can seek the assistance of an expert in the matters beforehand.

This can be a defense if the directors relied on the expert opinion in good faith. It must be appropriate too for use by the directors in question. It is expected that the directors performed due diligence before putting the advice into action.

You can use this defense if you sought advice from another officer or director, an employee you think is reliable or from a committee of directors.

Acted with the Right Judgement

Not all actions performed by the directors that lead to adverse effects are thought to have given rise to a of breach of the directors’ duties. You can use the defense if you fulfill the facts below:

There was no personal interest in the matter

The directors informed themselves of the subject before taking the decision

Every one believed that the decision was made with the best interests of the company at hand

Acted in good faith with the right purpose in mind

Delegation of Responsibility to Others

The directors may claim that they delegated the power to make some decisions to a delegate. The decision to get into business dealings with another party is left to the directors. However, the directors can delegate some powers to other officers in the organizations.

For the defense to take root, the directors should show that the person to whom the powers on decision-making are made had the capacity to handle the tasks, which were bestowed on him or her.

These defenses help the directors to act without fear of failure or being sued due to business dealings going wrong.

WHAT DO I DO NOW?

Contact us if you would like to have more information on managing the legal risks involved with directors’ duties. Our lawyers at You Legal will be happy to assist you in whatever way we can.

* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

June 21 2017

In March of this year the Australian Parliament introduced new legislation aimed squarely at corporate corruption and foreign bribery. The Crimes Legislation Amendment (Powers, Offences and Other Measures) Bill 2017 operates to amend the existing corruption and foreign bribery provisions in the Criminal Code Act 1995 (Cth).

The Bill imposes absolute liability on not only Companies and individuals, but seeks to ‘pierce the corporate veil’, by making corporations liable for the actions of their subsidiaries, contractors and any third-party entity who provides services or acts on behalf of the company. Continue Reading →

June 07 2017

The franchising industry is now heavily regulated by Australian Competition and Consumer Commission (ACCC). The ACCC has embarked on a new, revolutionary regime under the Franchising Code of Conduct 2015.

The Code prescribes a particularly high standard of conduct for franchisors. Of the 24 civil penalty provisions set out in the Code, 22 provisions relate to breaches by the franchisor. The Code also introduced new requirements including the good faith and disclosure obligations. With these in mind, the risks of breaching the Code should be managed by a comprehensive franchising strategy.

May 16 2017

Big data has taken different sectors of the economy by storm and Agriculture is not any different. It is being used in technologies involved in monitoring crops and animals, making paddocking decisions, deciding on the application of fertilizers and chemicals, and the prediction of possible problems. Big data is also used in soil moisture-sensing technologies, checking of pastures and management of the livestock.